Buying Property in Costa Rica

For lands, lots, vacation homes, farms, houses, or commercial property, Costa Rica extends the same rights to buy land and build to tourists and residents as it does to citizens. Though much of it has equivalence in the United States, Canada and Europe, the laws, regulations, customs and procedures are particular to Costa Rica.

Costa Rican law allows tourists and residents the absolute right to ownership of property. Property can be purchased in your individual name, jointly with other persons or in the name of a corporation. Tracking of land ownership is managed by the Costa Rican Government through 'the recording system', a Registry which acts as a depository for all documents related to property title - the Civil Code requires that all such documents are deposited with the Registry. Entries provide the name of the title holder, boundary lines of the property, tax appraisal, etc.

Beachfront property in most cases is comprised under the "Maritime Zone". It consists of a 200 meter strip along the Atlantic and Pacific coasts. The first 50 meters from the ocean is strictly public and cannot be used for private purposes. The next 150 meters can be used for private building or use through obtaining a lease concession from the Government, usually ranging for a period of 5-20 years.

Once you have found the property you are interested in purchasing, you (or your agent) must provide the Seller with a purchase offer and an earnest money deposit. If accepted, transfer of title takes place via an Escritura (a transfer deed) which must be signed before a Notary Public (who must be an attorney). The notary Public does not solely witness the document, but acts on behalf of the state.

A title search must be performed at the Public Registry. The title search will indicate the owner of title as well as any liens on the property. In determining title, the registry accepts 'first in time, first in right'. This means that registered documents are given priority according to the date and time in which they are recorded.

When concluding the transfer, the seller must provide proof that they are current with their property tax payments and Municipal assessments.

Costs
Impuesto de Traspaso (Real Estate Transfer Tax) is 3% of the registered value of the property. The Public Registry will not record a transfer deed unless the transfer taxes and documentary stamps have been paid.

Stamp Duty
Documentary stamps must be affixed to the deed totalling about 1.1% of the registered value of the property.

Notary Fees
The Notary who drafted the contract for sale and carried out the closing is entitled by law to a fee equal to 1.5% of the first ¢1 Million of the actual sales price and 1.25% on the balance.

The Escritura must be filed in the Public Registry before the land is transferred. The Notary who drafted the transfer must ensure that the deed is presented and registered in the Property Section of the Public Registry.